China’s pivot to domestic travel in the last two years provided a lifeline as its borders closed and outbound tourism dried up, but the country’s zero-covid strategy is crushing the industry grappling with the sudden lockdown of cities and scant government support.
Still, all is not lost as industry players see opportunities even if 2022 is likely to be a write-off.
Domestic tourism’s poster child status, however, has not been without obstacles; there have been restrictions on advertising tours, airlines having to adhere to Covid-19 rules and cancel flights, and tours being stopped on short notice as was the case for the May Day holiday and the outbreak in the capital.
At press time, Shanghai was still in lockdown, Beijing was undergoing mass testing and infections were detected in Guangzhou.
Kin Qin, deputy general manager of 25-year-old Century Holiday International Travel Group, remains positive even though 2022 is turning out to be the most challenging since the start of the pandemic.
Qin, who joined the company after graduating from hospitality industry studies some 16 years ago, is determined to stay despite the setbacks; most travel businesses have had to cut headcount, fend for themselves, and scour for opportunities to stay afloat.
For Century Holiday, the opening up of countries in South-east Asia, where it has offices in Singapore, Malaysia and Bali, is a welcome development as it can start bringing European and North American tourists back to the region.
According to the director of a boutique travel agency that specializes in tailor-made China programs for the Western market, in particular North America, the short- and medium-term is “not promising”.
The Shanghai-based director told TTG Asia: “People in China support the zero-covid policy. SMEs will have to wait it out, be creative and innovative. ”
The agency, which has offices in Shanghai and Beijing, was tapping the expatriate market and Western-educated returnee Chinese in the last two years.
The director continued: “Domestic travel is now totally impossible. April-May is peak period and business is down 90 per cent compared to last year. Even if people can travel, they are not willing. ”
Although the last few years have been “unpredictable and stressful”, he is hopeful the industry will improve by the end of 2022, but remains concerned that when business is back to normal, China could be facing a lack of “skilled tourism people” who left to join other industries or moved back to their hometowns for cheaper cost of living, and may not return.
When asked about the impact of China’s zero-covid policy on outbound travel, a veteran overseas industry observer, commented: “With the change to vaccinate older folks and using mRNA boosters for everybody from January 2022 to fight the new Omicron variant, outbound travel could start again from now.
“But as long as China keeps to a zero-covid strategy, no outbound tourism is possible. Most host destinations will not open their borders even if China would allow Chinese to travel abroad. ”
He said neighboring destinations like South-east Asia and Nepal have been impacted, but Hong Kong suffered the most, while Macau enjoyed a windfall being the only destination which could be visited with no quarantine upon returning to China.
The industry observer continued: “As I see it, the pandemic has to be brought under control and economic growth restarted before China’s borders will open.
“With the rest of the world having brought Covid-19 infections down – to AIDS virus infection levels – there will be no fear to travel abroad and the industry could see a big China outbound wave either from October 2022, optimistically, or from Chinese New Year 2023, which is more likely. ”
The industry observer advised: “Prepare now for the new demand and expectations of Chinese visitors in post-pandemic times. Embark on internal marketing in targeted destinations so that host communities are not afraid of Chinese visitors.
“To me, the Chinese government is missing a golden opportunity to help end the Russia-Ukraine conflict and develop a much improved image as a peacemaker. Continuing to sit on the fence and appearing to be neutral is not helping to warm people’s hearts. ”
He said such an approach would make Chinese visitors less welcome overseas, while discouraging foreigners from visiting China.
Shanghai-based Alexader Glos, CEO, China i2i Group, who has worked and lived in the financial center for 12 years – and another five in Beijing – said his city’s political leaders have acknowledged the need to fix the missteps, not usual in China.
Glos, too, fears China could lose a lot of talented people, as “everyone is figuring out what to do and where to go next”.
For Glos and i2i Group, which provides B2B and B2C tourism-related services to international and domestic clients, “China is not going away as household consumer spending is the fastest growing and it will be larger than the US by 2030 ″.
“China is a tremendous wealth generator not just for billionaire entrepreneurs, but also for small businesses,” he pointed out.
“If you are a consumer company, the only place to be is China. That is not going to change. What has changed is demand for high-end international premium and luxury travel and shopping patterns have shifted domestically, ”he said.
China has used travel as a “trading tool” and Glos sees the possibility of outbound travel, with a cap on numbers, to “safe” destinations suddenly opening up.
“It will happen by the end of this year – travel bubbles and corridors to countries that will benefit China politically and economically, and the flights will be sold out,” Glos projected.
According to him, demand in the first phase will be for high-end FIT trips to places like Singapore, Thailand, Malaysia, Bali in Indonesia and Cambodia.
So when China does open up and it will, industry players and stakeholders will have to move fast.